January 20, 2011

Obama's Review of Regulations: Useful, But Not in the Way He Intends

On one level, it’s hard not to see the regulatory review Barack Obama announced this week as a bit of a stunt. The idea, after all, isn’t to revisit the regulations his administration has supported in areas like health care, finance, or the environment. (Not something I’d like to see, to be sure.) The idea is to root out regulations from earlier eras that have either outlived their usefulness or contradict one another. This is all perfectly fine, and it could be effective politically. Still, the real surprise here isn’t that this administration is conducting a review. It’s that previous administrations haven’t conducted them on a regular basis, which seems a bit hard to believe.

Whatever the case, what’s almost always underwhelming are the presidential op-eds that accompany these gestures. Defunct statesmen are invoked and countless superlatives are expended, usually in inverse proportion to the cosmic significance of the initiative. Which is why I was pleasantly surprised to see that Obama’s rendition in Tuesday’s Wall Street Journal was actually pretty useful.

Don’t get me wrong, the piece had its less profound moments. To wit:

[T]he FDA has long considered saccharin, the artificial sweetener, safe for people to consume. Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.

(An aside: See, we were already doing this stuff!)

But, as a document, the Journal piece may be the clearest—and certainly most concise—statement of Obama’s economic philosophy I’ve ever seen, for both good and for ill.

First the good. In the very next paragraph, the president writes:

As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. [emphasis added.]

The bolded lines strike me as the essence of Obama-ism. Unlike New Democrats of the ‘80s and ‘90s, Obama has largely embraced both the goals of traditional liberalism and the government’s role in advancing them. But, unlike liberals of Great Society vintage, he’s made it his administration’s project to achieve these goals with the lightest touch possible. Despite all the conservative hyperbole about socialism, you see this across everything from the response to the banking crisis to health care and climate change.

And how exactly do you create an activist government that’s also minimally intrusive? Obama alludes to that in the second bolded sentence: You inform and incentivize consumers and businesses so they end up doing for themselves what earlier generations of liberals would have had the government do for them or mandate. Cap-and-trade is the most obvious example, since it decentralizes decisions that regulators would have once made themselves. But there were tons of smaller examples embedded in the administration’s health care plan, like comparative effectiveness research and incentives for coordination among health care providers. The sum total of this stuff strikes me as a pretty attractive vision of the state’s role in the economy. (For what it’s worth, Frank Foer and I took a crack at articulating this vision near the beginning of the Obama administration.)

As for the portion of Obama’s philosophy that’s sometimes problematic, this paragraph gets to the heart of it:

One important example of this overall approach is the fuel-economy standards for cars and trucks. When I took office, the country faced years of litigation and confusion because of conflicting rules set by Congress, federal regulators and states.

The EPA and the Department of Transportation worked with auto makers, labor unions, states like California, and environmental advocates this past spring to turn a tangle of rules into one aggressive new standard. It was a victory for car companies that wanted regulatory certainty; for consumers who will pay less at the pump; for our security, as we save 1.8 billion barrels of oil; and for the environment as we reduce pollution.

Implicit here is the idea that many of our biggest policy disagreements aren’t ideological but technocratic. That if you can just get the right people in the room, you can come to a reasonable understanding more often than not.

But while it’s clearly true that ideology is sometimes beside the point, I’m a bit more pessimistic than the president about how often that’s the case. For example, health care reform would appear to be a prime candidate for technocratic problem-solving—there are only so many ways to expand coverage while preserving as much of the status quo as possible and restraining costs. But, of course, a lot of conservatives flatly reject the idea that expanding coverage is desirable, at least if it involves any government role. For that matter, even the fuel efficiency example may be misleading, since a big chunk of the opposition party believes there’s nothing particularly problematic about carbon emissions, whereas government regulations are inherently unjust. (These people tend to go quiet on the national security argument.)

But these are debates for another day. For the moment, it suffices to say that, if nothing else falls out of the president’s regulatory initiative, it will have achieved a lot by distilling his worldview so clearly.

Update: Suspicion confirmed--the Times' Binyamin Appelbaum and Edward Wyatt have a great piece today about the unimpressive history of regulatory reviews, in which they report that every president since Jimmy Carter has promised one. So why haven't these reviews ever amounted to much? As the Timesputs it:

[T]here are few rules so dumb, duplicative or outdated that everyone can agree they serve no purpose. Rather, most regulations reviled by some are cherished by others, meaning that any effort to reduce regulation is a political process, not a question of housekeeping. ...

There is a federal regulation that dictates that place names on new highway signs must be spelled with just one capital letter — like This, not THIS. ... Advocates for senior citizens say that This is easier to read than THIS.

Those who complain about the prevalence of silly and outdated rules rarely cite specific examples. Several business groups asked to name specific candidates for the president’s project, including the United States Chamber of Commerce, never called back.